UK payment companies are urging the Payment Systems Regulator to delay a fraud reimbursement plan that would force them to reimburse victims of “authorised push payment” fraud up to £415,000 per claim starting in October. The Payments Association has requested a one-year delay to ensure that the industry has the right policies, technology, and systems in place to avoid permanent damage to the payment industry. This plea comes after the resignation of the PSR head, Chris Hemsley, due to backlash from industry and government criticism.
City minister Bim Afolami has also expressed concerns about the regulator’s proposals on APP fraud, citing “significant problems.” About 30 members of the Payments Association have complained that the changes could threaten the survival of smaller fintech companies. They are lobbying to lower the reimbursement threshold to £30,000 and are also calling for regulators and legislators to involve tech and social media companies in the reimbursement process. In 2023, Britons lost approximately £459.7 million to APP fraud, with almost 80% of cases starting online, according to UK Finance.
Riccardo Tordera-Ricchi, head of policy and government relations at the Payments Association, warned that implementing the changes as planned could increase prudential risk and requirements for participating in the UK payments market. This would also result in higher costs and friction for real-time payments and decreased investment in the UK fintech market due to higher risks and lower profitability. The industry is hoping for a delay to address these concerns and ensure a smoother transition to the new rules.
The Payments Association’s plea for a delay in the fraud reimbursement plan comes as David Geale takes over as the interim managing director of the PSR following Hemsley’s resignation. Geale, who has been on the PSR’s board since 2020, was previously the director of retail banking at the Financial Conduct Authority. UK Finance has also voiced concerns about the proposed changes, fearing that they could lead to an increase in “complicit fraud” if criminals pose as victims to claim compensation illegitimately.
While the trade body is not calling for an extension of the rules, its members are working towards meeting the October deadline. The industry is hopeful that by delaying the implementation of the rules, there will be more time to address concerns, involve key stakeholders, and ensure a smooth transition. This move could help prevent permanent damage to the UK’s payment industry and safeguard the interests of both payment companies and consumers affected by fraud. It remains to be seen how the PSR will respond to these requests as the industry continues to navigate the challenges posed by fraudulent activities in the digital payment landscape.
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